The net output in service sectors taken together rose 8.2% in real terms in the first quarter, compared to a year earlier. This was up on the 6.4% rise in the fourth quarter of 2003.

Analysed by constituent sector and on a year-on-year comparison, net output in wholesale, retail and import and export trades, restaurants and hotels surged by 12.6% in real terms in Q1, faster than the 11.2% rise in the previous quarter.

This was mainly attributable to continued robust performance in Hong Kong's external trade, amid a broad-based revival in global demand. Also contributing was a rise in net output of retail trade and restaurants and hotels, attributable to a notable growth in inbound tourism and pick-up in consumer spending.

Net output in transport, storage and communications rose 12.1% in real terms in Q1over a year earlier, faster than the 5.3% rise in last year's Q4.

The buoyancy in external trade underpinned the strong growth in transport and storage services. Net output in communications services also grew, upon continued expansion in the traffic volumes of international and mobile phone services.

Robust growth in banking services

Net output in financing, insurance, real estate and business services rose 12% in real terms in Q1over a year earlier, after a rise of 8.6% in Q4.

The growth impetus came mainly from the robust rise in banking services, on the back of a substantial increase in commission and service income. Also relevant was a leap in stock brokerage companies' net output, underpinned by the continued upsurge in stock market turnover in Q1.

Net output in the local manufacturing sector registered a 1.8% rise in real terms in Q1 over a year earlier, reversing the fall in the past few years. This was explained by brisk global and regional demand.

Net output in the construction sector fell 6.8% in real terms, similar to the 6.9% decrease in Q4. This was mainly due to a fall-off in private sector building work, which more than offset public sector growth output from some major civil engineering projects.